Catalyst Canada Services LP v Catalyst Changers Inc, 2013 ABQB 73

Court of Queen ’ s Bench of Alberta Citation: Catalyst Canada Services LP v Catalyst Changers Inc, 2013 ABQB 73 Date: 20130204 Docket: 1201 07168 Registry: Calgary Between: Catalyst Canada Services LP and CEDA Catalyst Canada Services Ltd. Plaintiffs / Respondents - and - Catalyst Changers Inc., Young Energyserve Inc., Hunterwood Technologies Ltd., Kenneth E.

Chapman, Mike Hatch, Jack Molstad, Darren Nyrose, Kevin Chapman, Robert Chapman, Accurate Screen Ltd., operating as Accurate Screen and Grating, Murray Mcdonald, Todd Bigelow, John Doe and XYZ Corporation Defendants / Applicants _______________________________________________________ Reasons for the Decision of the Honourable Mr. Justice K.D. Yamauchi _______________________________________________________

I. Introduction [ 1 ] On June 5, 2012, Jeffrey J granted an ex parte interim injunction order (the “Injunction Order”) as part of a wider seizure of evidence pursuant to an Anton Piller order (the “Anton Piller Order”). This Court will refer to the Injunction Order and the Anton Piller Order collectively as the “Orders”. The applicants that appeared before Jeffrey J were Respondent Plaintiffs Catalyst Canada Services LP (“Services”) and CEDA Catalyst Canada Services Ltd. (“CEDA”).

This Court will refer to Services and CEDA collectively as the “Respondent”. [ 2 ] Pursuant to the Injunction Order, Applicant Defendant Catalyst Changers Inc. (“Changers”) delivered-up two trailer-mounted cyclone separators (the “Applicant’s Separators”) to the Independent Supervising Solicitor (the “ISS”) appointed under the terms of the Anton Piller Order.

The Respondent’s claim regarding the Applicant’s Separators is that they were copied from two trailer-mounted cyclone separators belonging to the Respondent (the “Respondent’s Separators”). [ 3 ] In this application, Changers seeks to vary the Injunction Order and have this Court order the ISS to return the Applicant’s Separators to it. As with many matters that appear before the court during the court’s commercial duty weeks, the parties have requested this Court to render its decision promptly. This Court has used its best efforts to accommodate the parties’ request. II.

Facts [ 4 ] Before this Court outlines the salient facts, it is worthwhile to provide an easy reference list of the persons to whom it will refer throughout these reasons, in addition to those defined above. They are: Defendants Murray McDonald (“McDonald”) and Todd Bigelow (“Bigelow”): directors, officers and owners of Changers and Accurate Screen Ltd., operating as Accurate Screen and Grating (“Accurate Screen”) Mike Hatch (“Hatch”): employed as a Services’ division manager, who is now a Changers’ employee Kenneth E.

Chapman (“Chapman”): employed as a Services’ senior employee, who is now a Changers’ employee Jack Molstad (“Molstad”): employed as a Services’ project manager, who is now a Changers’ employee Hunterwood Technologies Ltd. (“Hunterwood”): designs and manufactures equipment and is based in Cochrane, Alberta Plaintiffs Laurie Spicer (“Spicer”): a 30-year employee of Services, who, at all material times, was Services’ shop foreman at its Cochrane office.

Spicer swore an affidavit dated May 31, 2012, in support of the Respondent’s ex parte application for the Orders David Osborne (“Osborne”): at all material times Osborne was a director of CEDA and the chief executive officer of CEDA’s parent company. Osborne swore two affidavits dated May 31, 2012, and June 4, 2012, in support of the Respondent’s ex parte application for the Orders

[ 5 ] The Respondent argues that Hatch and Chapman had access to its confidential and proprietary information because of the positions they held with Services. This information included specification information, documents, drawings, plans and other records relating to the scientific, technical, design, manufacturing, engineering features and specifications of equipment, including the Respondent’s Separators. Chapman and Molstad, in their employment capacities, repaired and maintained Services’ equipment. [ 6 ] Services has been operating since approximately 1973.

Its business involves catalyst handling and catalyst processes used in the refining and petrochemical industries. In Alberta, Services primarily services gas plants. [ 7 ] On or about March 8, 2012, Chapman and Hatch contacted McDonald and Bigelow to discuss the possibility of starting a new company whose objects would be the removal and disposal of catalyst used in the desulphurization of sour gas at gas plants in Alberta. At that time, McDonald and Bigelow were involved in Accurate Screen, which carries on a business which differs from the catalyst removal business.

Accurate Screen has been in operation since 2001. Neither McDonald nor Bigelow had been involved in the catalyst removal industry. Chapman and Hatch approached them for financing the new operation. Before March of 2012, McDonald and Bigelow had no independent business dealings with Chapman or Hatch. [ 8 ] Chapman and Hatch have worked in the catalyst removal industry for 18 years and 11 years, respectively. At the time of their discussions with McDonald and Bigelow, Chapman and Hatch were still employed by the Services.

Hatch was subject to a confidentiality and non-solicitation agreement with a corporation, CEDA Reactor Ltd., that contained a two-year post-termination restriction with respect to non-solicitation of customers and employees. Chapman had no such agreement with CEDA Reactor Ltd. or the Respondent. CEDA Reactor Ltd. is not a party to this action.

Although Changers argues that there is no evidence before the court concerning the relationship between the Respondent and CEDA Reactor Ltd., the Respondent argues that through an amalgamation, Services is a subsidiary of CEDA Reactor Ltd.’s successor. [ 9 ] The Respondent provided this Court with details of the steps that Chapman and Hatch took while they were planning to set up Changers’ competing business. As well, it provided this Court with conclusions that the ISS reached following its review of the materials that it collected as a result of the Anton Piller order.

Of course, those conclusions are not binding on this Court. That information is not relevant to the matter that is currently before this Court, other than, possibly, the information as it relates to the Applicant’s Separators and the Respondent’s Separators. [ 10 ] On or about March 22, 2012, Changers was incorporated and subsequently, in approximately early May of 2012, began to operate in the catalyst removal and disposal business.

Changers is wholly-owned by McDonald, Bigelow and their respective wives, through a holding corporation. [ 11 ] On or about March 22, 2012, Chapman resigned his employment with Services and joined Changers. Subsequently, on or about May 29, 2012, Hatch resigned from his employment with Services and joined Changers in an operations role. The Respondent argues that Hatch took this role to avoid breaching any enforceable restrictions in his confidentiality and non-solicitation agreement with CEDA Reactor Ltd.

Molstad resigned from his employment with Services and joined Changers in May of 2012. [ 12 ] The Respondent alleges that Chapman and Hatch wrongfully took certain information and documents. Some of the information they allegedly took concerns the Respondent’s Separators. [ 13 ] Spicer deposed in his affidavit sworn in support of the Respondent’s ex parte application, that Chapman informed him that before Chapman terminated his employment with Services, he attended at Services’ Cochrane office with two representatives of Hunterwood. They took some photographs and measurements of the Respondent’s Separators.

The First Report of the ISS filed July 3, 2012 (the “First ISS Report”), includes detailed hand-drawn schematics of the Respondent’s Separators that were found at Chapman’s residence, and photographs and drawings of the Respondent’s Separators that were delivered up by Hunterwood following the commencement of this action. [ 14 ] On or about May 4, 2012, Changers took delivery of the Applicant’s Separators from Hunterwood. On or about May 7, 2012, Catalyst Changers commenced its first job using the Applicant’s Separators.

[ 15 ] The Respondent argues that Changers is competing with it. As a result of this competition, it has “lost out on a number of major projects where it had been engaged and scheduled to perform work.” [ 16 ] The Injunction Order required Changers to deliver-up the Applicant’s Separators to the ISS. This occurred 8 days after Jeffrey J granted the Injunction Order. The Applicant’s Separators have been impounded ever since. [ 17 ] Despite the loss of its use of the Applicant’s Separators, Changers has continued to carry on business.

However, Changers argues that the loss of its use of the Applicant’s Separators has put it at a serious competitive disadvantage during the critical start up phase of its development. This has made it difficult or impossible for Changers properly to bid on or

schedule new jobs. It lacks the appropriate equipment to carry out those jobs in a timely fashion. As a result, Changers has and will continue to suffer harm from the loss of its use of the Applicant’s Separators. [ 18 ] Changers points out that since Jeffrey J granted the Orders, Changers and its employees and contractors have fully complied with the requirements of the Injunction Order and the Anton Piller Order, and Changers has taken steps to ensure that no use is made of any documents or information that belongs to the Respondent. III. Issues [ 19 ] There are a number of issues that arise from these facts.

They are: A. Whether Changers delayed in bringing its application to set aside the Orders. B. What is the standard of review for the ex parte Injunction Order? C. Whether this Court should set aside the Injunction Order because of the Respondent’s failure to make full and frank disclosure of all material facts during the ex parte application. D. Considering all the material facts, whether Jeffrey J properly granted the Injunction Order, which resulted in Changers surrendering the Applicant’s Separators to the ISS. The sub-issues that arise from this issue are: 1. Which injunction test applies? 2.

Is there a strong prima facie case in favour of the Respondent or, alternatively, a serious issue to be tried? 3. Will the Respondent suffer irreparable harm if the injunction is varied? 4. Which party will suffer greater harm from maintaining or varying the injunction (i.e. the balance of convenience test)? IV. Discussion [ 20 ] Before this Court embarks on a discussion of the issues before it, it is worthwhile to explain briefly the subject matter of the dispute between the parties.

A cyclone separator is a device that, in conjunction with a vacuum truck, removes catalyst used to de- sulphurize sour gas from the vessel that contains the catalyst. It separates the catalyst from dust and gases that are removed from the vessel at the same time. Because of the product with which it is dealing, this process can pose a significant risk to health and safety. The

cyclone uses gravity and centrifugal force to separate solid material, such as catalyst, and allows that material to accumulate at thebottom of the cyclone, while the dust and gases are vented separately. [21] Catalyst that accumulates at the bottom of a cyclone separator can be removed by various means, including a rotary valve or aknife gate. The Applicant’s Separators use a rotary valve, as do the two Respondent’s Separators.

The Respondent also hasapproximately twelve other cyclone separators in Alberta in addition to the two Respondent’s Separators, all of which use a knife gaterather than a rotary valve. [22] The Orders are not permanent or final orders. They are temporary orders, pending a trial of the various issues that the partieshave raised. As well, it should be noted that the parties have placed before this Court detailed explanations of the workings of theApplicant’s Separators and the Respondent’s Separators, including the reports of their respective experts.

In the absence of viva voceevidence heard in the context of the whole trial, it would be premature for this Court to rule on the cogency of that evidence. The partiesconcede that the purpose for which they presented this evidence through their written briefs was to help this Court determine whether theRespondents have met the tests for an Injunction Order or the Anton Piller Order. A. Whether Changers delayed in bringing its application to set aside the Orders [23] The Respondent argues that this Court should dismiss Changers’ application because of Changers’ delay in bringing thismatter forward.

Changers did not file and serve the application to vary the Injunction Order until more than 12 weeks after Jeffrey Jgranted the Injunction Order. The Respondent further argues that Changers’ delay in bringing the application also offends rule 9.15(2) ofthe Alberta Rules of Court, Alta Reg 124/2010, which says: 9.15(1) On application, the Court may set aside, vary or discharge a judgment or an order, whether final or interlocutory, that was made (

a) without notice to one or more affected persons, ...

(2) Unless the Court otherwise orders, the application must be made within 20 days after the earlier of (

a) the service of the judgment or order on the applicant, and (

b) the date the judgment or order first came to the applicant’s attention. [24] Although the wording of rule 9.15(2) is mandatory, it allows the court to grant an order that extends the period within whichthe applicant must make its application.

Furthermore, the Injunction Order contains a “come-back” provision, which states that anapplication to set it aside can be made on 5 days’ notice. [25] In Dakota Tipi First Nation v Woods (2002), 2002 MBQB 41 , 162 Man R (2d) 66 at paras 1, 5 and 11(QB) [DakotaTipi], the court dismissed an application to set aside an ex parte injunction based on the applicant’s delay in bringing the matter beforethe court. In that case, the application to set aside was filed just under 1 month after the court granted the injunction.

The court found thatthe applicant’s delay amounted to a waiver of its right to set aside the injunction. The facts in Dakota Tipi are important. The ex parteinjunction prohibited certain persons from occupying the Band offices of the Dakota Tipi First Nation. There was no “come-back”provision contained in the injunction order. The “assertion” that would ground the defendants’ application was the inadequate disclosurein the affidavits filed in support of the ex parte application.

Schulman J said: Normally, one would expect the assertion to be made at the first opportunity and on the first appearance in response to the notice that isserved following the granting of an ex parte application. In this instance, counsel for the defendants not only made the assertion but alsofiled a notice alleging breach of the requirements on the part of Dakota Tipi. However, in the months that followed, it is clear that the

defendants chose not to press the point. Although counsel for the defendants had an opportunity to cross-examine on affidavits and havethe motion heard in August 2001, he chose not to proceed with it. Further, the defendants accepted the benefit of the relaxation of theinjunction made by Schwartz J. on August 3, 2001, and consented to the indefinite extension of the injunction. Moreover, they did notassert the point when I extended the injunction to the bingo hall for three days on August 23, 2001.

Although new counsel wishes toassert the point, I find that the defendants waived the alleged irregularity by virtue of these acts. [Emphasis added]. [26] In the case before this Court, Changers’ counsel took many steps before filing its application, including obtaining a list ofdocuments that the ISS seized pursuant to the Anton Piller Order, cross-examining Spicer and Osborne on their affidavits, reviewing 2reports from the ISS and reviewing answers to the undertakings that Spicer and Osborne provided. After it filed the application onAugust 24, 2012, it took further steps in these proceedings.

This case is clearly distinguishable from Dakota Tipi. [27] In Goulet v da Silva, 2002 ABQB 369 , 2002 CarswellAlta 471 at para 72, 313 AR 32 (QB), Watson J, as he thenwas, citing Wilson Arches Ltd v Sayers, 1973 ALTASCAD 117 , [1974] 2 WWR 277, 1973 CarswellAlta 139 (CA) as hisauthority, said: Mere delay will not be a bar to the application unless an irreparable injury will be done to the Plaintiff or the delay has been wilful. [28] This Court finds that the Respondent did not suffer irreparable injury as a result of the delay.

In fact, during this period, no onewas using the Applicant’s Separators, as they were impounded pursuant to the Anton Piller Order. This Court finds, as well, thatChangers has not wilfully delayed its application. [29] Finally, the Injunction Order contains a specific “come-back” provision. It says “This Order may be set aside upon five (5)days notice to the Plaintiffs”: Injunction Order para 6. The Injunction Order does not say that Changers must make its application withina specified period.

It only says that 5 days’ notice must be given to the Plaintiffs. [30] This Court will not deny Changers the right to have this matter heard on the basis of delay. B. What is the standard of review for the ex parte Injunction Order? [31] An application to vary or vacate an ex parte injunction order requires a de novo hearing of the merits of the injunctionapplication.

Paperny J, as she then was, said in Capitanescu v Universal Weld Overlays Inc., (AB KB), 1996CarswellAlta 936 at para 11, 141 DLR (4th) 751 (QB): A judge who hears a motion to rescind or vary an ex parte injunction should hear the matter de novo as to both the law and the factsinvolved. In Pulse Microsystems Ltd. v. SafeSoft Systems Inc. (1996), (MB CA), 67 C.P.R. (3d) 202 (Man. C.A.) at206, the Court relied on the rationale of Sidney Smith J.A. in Gulf Island Navigation Ltd. v. Seafarers’ International Union of NorthAmerica (Canadian District) (1959), (BC CA), 18 D.L.R. (2d) 625 (B.C.

C.A.) at pp. 630-31: Once a judge has for examination another judge’s ex parte order, I think there should be no restriction on the scope of the hearing; itshould be one de novo. Ex parte orders are sui generis; the general rule of adjudication is audi alteram partem and that rule is onlyrelaxed in ex parte proceedings because of their inconclusiveness.

In such proceedings a judge usually relies on counsel to a large extent,both as to the facts and the law; and to hold that when the inconclusive order is looked at again more carefully, the party at first absent isrestricted so that he cannot raise all the points that he could have raised if heard in the first instance, is clearly an injustice. It would meanthat if the original Judge is not available for re-hearing, the party not at first heard is seriously prejudiced.

In the absence of intractableauthority the other way, we should hold that he is entitled to be heard, not to be half heard, which is all that he would be if any part of thesubject of the ex parte order were closed to him when he at last got before a Judge. This is as it should be. In this case, Jeffrey J heard only the submissions of the Respondent and did not have the opportunity to hearChangers’ submissions. It is fair and just that this Court make its ruling only after hearing both sides of the story. See also Lyons vCreason, 2008 CarswellAlta 1219 at para 3, 2008 ABQB 550 [Lyons].

[ 32 ] The onus is on the Respondent to prove that the criteria for granting the injunction are met: Lyons at para 3 . This Court will consider the test for an injunction order based on all of the evidence that the parties present, not just the evidence available at the original hearing: CCS Corp v Secure Energy Services Inc , 2009 CarswellAlta 935 at para 14 , 2009 ABQB 275 , 13 Alta LR (5th) 70. The Injunction Order does not create a status quo that would shift the onus to Changers. C.

Whether this Court should set aside the Injunction Order because of the Respondent ’s failure to make full and frank disclosure of all material facts during the ex parte application. [ 33 ] The Respondent was required to make full and frank disclosure of all material facts to Jeffrey J. It does not contest this principle.

The question, however, is whether it made this disclosure to Jeffrey J. [ 34 ] Changers argues that the affidavits the Respondent used in support of its ex parte application for the Injunction Order “grossly exaggerate the allegedly unique and confidential nature of the Respondent’s Separators.” Both affiants deposed that Services’ competitors had not developed similar products, although during cross-examination on their respective affidavits, neither Osborne nor Spicer testified that they were aware of what their competitors were doing.

Changers argues that the Respondent’s Separators are old and have been modified over time. As well, there are other options available for a person to acquire cyclone separators suitable for removing catalyst. Spicer is not subject to a confidentiality agreement concerning his design and fabricating of the Respondent’s Separators and the Respondent’s Separators are left exposed to the public during transport from one work site to another. [ 35 ] An issue that will be placed before the trial court is whether the Respondent’s Separators are highly specialized and unique.

The trial court might find that they are highly specialized or unique, based on the testimony of experts and others, in which case, the statements that Osborne and Spicer made are not “grossly exaggerated.” The arguments that Changers makes concerning this issue cannot be determined at this stage of the proceedings. Certainly, Spicer and Osborne lack knowledge as to the nature of the competitor’s products. That, however, does not mean that the Respondent’s Separators are not unique. As well, the age and public exposure of the Respondent’s Separators may show a lack of care in “hiding” their uniqueness.

However, those factors do not mean that they are not unique. [ 36 ] At this stage, this Court questions the importance of many of the factors that Changers raises, and whether those factors are “material.” As stated by Sharpe J in United States v Friedland , 1996 CarswellOnt 5566 at para 31 (Gen Div) : The duty of full and frank disclosure is, however, not to be imposed in a formal or mechanical manner. Ex parte applications are almost by definition brought quickly and with little time for preparation of material.

A plaintiff should not be deprived of a remedy because there are mere imperfections in the affidavit or because inconsequential facts have not been disclosed. There must be some latitude and the defects complained of must be relevant and material to the discretion to be exercised by the Court. The “materiality" of the facts will unfold as this matter proceeds. However, at this stage, on this basis alone, this Court will not vary the Injunction Order. D.

Considering all the material facts, whether Jeffrey J properly granted the Injunction Order, which resulted in Changers surrendering the Applicant ’s Separators to the ISS. 1. Which injunction test applies? [ 37 ] In Exotic Frozen Foods Ltd v Nelco Corp , 1981 CarswellAlta 431 at para 26, 29 A.R. 38 (QB) [ Exotic Foods ] , Egbert J, after discussing a number of older Canadian cases involving interlocutory mandatory injunctions said: It must be remembered that all of the cases to which I have referred were decided prior to the American Cyanamid case, which

established the “serious issue” test in place of the “strong prima facie case” test. However, in view of the unusual and serious results thatcan emanate from the granting of an interlocutory mandatory injunction (as Megarry, J., said “What is done is done”), I am of the viewthat the proper test to be applied in determining whether an interlocutory mandatory injunction should be granted is the “strong primafacie case” test. [38] Exotic Frozen Foods was decided before RJR - MacDonald Inc v Canada, (SCC), 1994 CarswellQue 120,[1994] 1 SCR 311 [RJR].

In that case, the Supreme Court of Canada said at para 48 that, “a preliminary assessment must be made of themerits of the case to ensure that there is a serious question to be tried.” It went on to say at para 49 that, “it would suffice if he or shecould satisfy the court that ‘the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried’” and thatthe threshold is low: ibid at para 54. [39] The Supreme Court of Canada provides us with 3 exceptions to the “serious issue to be tried test” in which case the “strongprima facie case test” will be applied.

They are, where the result of the interlocutory motion will in effect amount to a final determinationof the action, when a question of constitutionality presents itself as a simple question of law alone, and where the factual record is largelysettled prior to the application being made. None of those exceptions apply to the case before this Court. [40] In RJR the Supreme Court of Canada did not distinguish between the tests applicable to mandatory versus prohibitoryinjunctions. Thus, it is arguable that in the case of a mandatory injunction, the “strong prima facie case” test continues to apply.

In fact,the Alberta Court of Appeal held that it does. In Medical Laboratory Consultants Inc v Calgary Health Region, 2005 CarswellAlta 333 at para 4, 2005 ABCA 97, 43 Alta LR (4th) 5, the court said: [The chambers judge] was also correct in determining that, because the respondents were seeking a mandatory interlocutory injunction,that is, one requiring a positive act by the appellant, the first branch of the test required the respondents to establish that they have astrong prima facie case.

Thus, if this Court is dealing with a mandatory injunction, it must apply the more stringent “strong prima facie case” test, rather than the“serious issue to be tried” test. [41] Changers argues that this Court is dealing with a mandatory injunction, as the Injunction Order required it to deliver theApplicant’s Separators to the ISS. The Respondent, on the other hand, argues that one could just as easily characterize the injunction asprohibitory, as, practically, the Injunction Order prohibits Changers from using the Applicant’s Separators.

It cites Roth v 791787Alberta Ltd, 2002 SKQB 373 at para 7 in support of its argument that “most injunctions can be framed as either mandatory or prohibitorydepending on semantics.” Certainly, that might be true in some cases, but it behooves the court to attempt to characterize the nature ofthe injunction that the applicant seeks, as the test that the court applies will differ depending on that characterization. [42] The Injunction Order requires Changers’ positive action to “deliver up to the ISS without retaining any copies…allequipment” including the Applicant’s Separators.

That type of wording might require this Court to apply the more stringent “strongprima facie case” test. However, this Court must look beyond this to determine what the Respondent was seeking in the first place. [43] In Peleshok Motors Ltd v General Motors of Canada Ltd, 1977 CarswellOnt 42 at paras 20-21, 2 BLR 56 (Ont HCJ)[Peleshok Motors], Goodman J was dealing with a situation where a party was seeking to enforce a franchise agreement, which he foundwas a mandatory injunction. He said: The standard of proof required is somewhat higher than is the case in an application for a restrictive injunction.

In distinguishingbetween the two types of injunctions, the learned authors in Snell’s Principles of Equity, supra, say at p. 624: An injunction restraining the doing or continuance of some wrongful act is called prohibitory or restrictive. An injunction to restrain thecontinuance of some wrongful omission is called mandatory. In the present case, the plaintiff says that he is not asking for a mandatory injunction, but rather for an injunction preventing thedefendant from committing a breach of the agreement. In my view, in effect, he is asking for an order of the Court compelling the

defendant to continue to supply to him motor vehicles and vehicle parts and other services in accordance with the agreement. To thatextent, he is asking that the defendant be ordered to do certain things, that is to say, to refrain from continuing some wrongful omission.He is not asking that the defendant be ordered to refrain from doing some wrongful act. In that regard, it should be noted that the veryrelief asked for in the notice of motion is an order that the defendant be compelled to abide by the terms of the agreement, whichagreement requires that the defendant do certain specific things.

In my opinion, he is asking for a mandatory injunction, whatever theappearance of the application may be. [44] In the case before this Court, the Respondent does not want the Applicant’s Separators. It wants Changers to refrain fromdoing a wrongful act, viz., using the Applicant’s Separators, which the Respondent claims are copies of the Respondent’s Separators.Changers has not committed a wrongful omission. In other words, it has not omitted to do something.

An example of how a court mightdifferentiate between prohibitory and mandatory relief was illustrated in Western Canadian Oil Management Services Inc v Arlyn Enterprises Ltd, 2008 ABQB 521 , 2008 CarswellAlta 1173 at para 118-119, 98 Alta LR (4th) 263 (QB), where Bensler J said: In addition to an investigation, Westcom is seeking certain injunctive relief.

This relief includes an order prohibiting the Respondentsfrom: taking any steps out of the ordinary course of business to alter Arlyn’s accounts or to conceal, alter or destroy any relevant records;taking any steps to enforce any Notice to Sell without leave of the Court, or; taking any steps in breach of the VSA. The Applicants are also seeking mandatory injunctive relief including an order to: pay the fixed fee portion and any undisputed portionsof the variable fee of all unpaid Westcom invoices, and; pay into Court the disputed portion of any variable fee ...

The amounts for which the applicants in that case were seeking payment were pursuant to an agreement between the parties. This fitssquarely within the description of mandatory relief set out in Peleshok Motors, as the respondents were wrongfully omitting to dosomething they were obligated to do.

Similarly, the prohibitory relief sought to prevent the respondents from doing or continuing certainwrongful acts. [45] In the case before this Court, the Respondent seeks to prevent Changers from continuing to commit a wrongful act, viz., usingthe Applicant’s Separators which are allegedly copies of the Respondent’s Separators. This is a prohibitory injunction. It was possible toeffect this result without having the Applicant’s Separators in the hands of the ISS (the “mandatory” portion). [46] Thus, this Court will apply the serious issue to be tried test to the facts before it. 2.

Is there a serious issue to be tried? [47] In its written brief that it provided to this Court in anticipation of the hearing of this matter, the Respondents said thatChangers “spends 34 paragraphs (over 12 pages) attempting to argue that [Services] cannot establish a serious issue to be tried.” TheRespondent then goes on for 49 paragraphs (15 pages) arguing that there is a serious issue to be tried.

Changers argues that the bestevidence before this Court is that the Applicant’s Separators are not copied from the Respondent’s Separators and are a different design.As well, they argue that there is nothing special or unique about the Respondent’s Separators. The Respondent argues that theRespondent’s Separators are unique and that the Applicant’s Separators were constructed using the Respondents’ confidential,proprietary information. [48] The experts that each party retained provided differing opinions concerning the design and the uniqueness of each of theApplicant’s Separators and the Respondent’s Separators.

Changers argues that its expert was not provided with an opportunity physicallyto examine each of the separators, despite its request to provide the expert with that opportunity. The Respondent states that it did notdeny or withhold its consent to allow Changers’ expert to view the Respondent’s Separators. This Court need not make a finding onwhether Changers’ expert was not provided an opportunity physically to examine each of the separators.

It simply notes at this stage thatChangers’ expert was critical of the Respondent’s expert’s report in many different respects. [49] Although one could surmise that conflicting expert reports shows that there is a serious issue to be tried, we must rememberthat, at this stage, it is the Respondent’s onus to show such an issue. Even with the information that both parties have provided to this

Court through their written briefs, which refer to their respective expert reports, and their oral arguments, this Court cannot determinewhich expert opinion to accept. Although it appears that Chapman, Hatch and Hunterwood had in their possession Services’ proprietaryinformation, at this stage, this Court cannot determine whether, operationally, the Applicant’s Separators and the Respondent’sSeparators were the same, or were intended so to be. [50] Changers argues that the design of the Respondent’s Separators is not confidential or a trade secret.

The test for breach of anobligation of confidentiality requires that 1) the information must have the necessary quality of confidence about it, 2) the informationmust have been provided in circumstances importing an obligation of confidence, and 3) there must be an unauthorized use of thatinformation to the detriment of the party communicating it: International Corona Resources Ltd v LAC Minerals Ltd, (SCC), [1989] 2 SCR 574 at para 10; [International Corona]; Aram Systems Ltd v Novatel Inc, 2009 ABCA 262 at para 44. [51] Changers further argues that the court may consider: …the extent to which the information is known outside the owner’s business; the extent to which it is known by employees and othersinvolved in the owner’s business; the extent of measures taken by the owner to guard the secrecy of the information; the value of theinformation to him and his competitors; the amount of money or effort expended by him in developing the information; and the ease ordifficulty with which the information could be properly acquired or duplicated by others: Stonetile (Canada) Ltd v Castcon Ltd, 2010 ABQB 392 , 2010 CarswellAlta 1073 at para 19, ABQB 392, 29 Alta LR (5th) 239 [Stonetile], quoting Pharand SkiCorporation v Her Majesty the Queen in the Right of Alberta, (AB KB), 1991 CarswellAlta 85 at para 144, 116 AR326 (QB). [52] The design of the Respondent’s Separators was not recorded by blueprint, drawing, description or any other concreterepresentation that the Respondent kept confidential.

Rather, the Respondent’s Separators were solely in physical form that was availablefor “casual viewing” by any employee, customer or competitor. Furthermore, the Respondent’s Separators have been in the publicdomain since the original Respondent’s Separator began operation in approximately 1973. They were not covered when transported norotherwise protected, functionally or contractually, when operating at a customer’s facility, when parked in the Respondent’s yard, whenbeing repaired or even when constructed at a local welding shop.

Consequently, Changers argues, the Respondent cannot sustain a claimthat the design of the Respondent’s Separators was confidential. [53] On the other hand, the Respondent argues that the design of the Respondent’s Separators and, thus, the Respondent’sSeparators themselves, are confidential. In International Corona at para 156, the Supreme Court of Canada said: The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely, itmust not be something which is public property and public knowledge.

On the other hand, it is perfectly possible to have a confidentialdocument, be it a formula, a plan, a sketch, or something of that kind, which is the result of work done by the maker upon materialswhich may be available for the use of anybody: but what makes it confidential is the fact that the maker of the document has used hisbrain and thus produced a result which can only be produced by somebody who goes through the same process. [Emphasis added].

In the later case of Cadbury Schwepps Inc v FBI Foods Ltd (1999), (SCC), 167 DLR (4th) 577 at para 75 (SCC), theSupreme Court of Canada made a similar statement, but said, as well, “[e]quity has set a relatively low threshold on what kinds ofinformation are capable of constituting the subject matter of a breach of confidence.” [54] The Respondent argues that it has made considerable efforts to prevent disclosure of its confidential and proprietaryinformation in relation to the Respondent’s Separators.

In particular, it has not made that information available to anyone who has notbeen employed or contracted to Services, and the Respondent’s Separators have never been leased or available for rent. They are storedin locked and gated facilities when they are not in use. [55] Changers concedes that the use of a rotary valve makes the Respondent’s Separators unique. There is no evidence that any ofthe Respondent’s competitors use a rotary valve on its catalyst equipment to load and unload catalyst (other than the Applicant’sSeparators).

However, the Respondent argues, the confidential and unique nature of the Respondent’s Separators is not confined to therotary valve. The Respondent’s Separators consist of a unique combination of a number of different parts and it is the totality of the finalproduct that is confidential to the Respondent.

[56] Changers argues that the Applicant’s Separators are, in part, constructed with components that are available publicly, such asthe hydraulics and the motors, the latter of which Changers describes as being “plug and play.” They further argue that Survival SystemsIndustrial Ltd v Syrett, (NS SC), 1997 CarswellNS 523, 495 APR 49 (NSSC) [Survival Systems] is on all fours withthe case before this Court. In Survival Systems the court was considering a situation where the defendants were using the plaintiff’sclient lists to solicit business.

As well, the defendants were using training simulators “which are virtually identical to those developed bythe plaintiff”: ibid at para 8. The defendant deposed that he constructed the simulators, “but they are based on common designs readilyand publicly available.”: ibid. In its 39-paragraph decision, the court dealt with the issue of the simulators by saying, “I have not beenpersuaded that the use of these two pieces of equipment by the defendants will cause irreparable harm if an injunction is not granted”:ibid at para 34.

This Court assumes that this reasoning was based on the defendant’s statement, but it does not know. Here, the partieshave provided much more information. Accordingly, this Court does not find that Survival Systems is on all fours with the case withwhich it is dealing. [57] The combination of otherwise non-confidential parts and elements of a product or machine and the method of creating such anamalgam, could constitute confidential and proprietary information.

For example, in Stonetile at para 19, Nation J found that a cementexterior moulding system was confidential and proprietary even though certain of its components were public. She said at para 50: ... I conclude that although there was some public disclosure of aspects of the Stonetile system ... there was not sufficient disclosure ofdetails of the overall production process to say that process was in the public domain. Nor can it be said that sufficient detail of theproduction process had been made public that the details of Stonetile’s process taken together have lost their confidential nature.

I findthat Stonetile took sufficient steps to guard its production process as confidential, to meet the onus it carries as the plaintiff to prove thatthe production process was confidential information. [58] Whether the Respondent’s Separators have been in the public realm for almost 4 decades will not determine whether theyremain confidential.

The court must look at the whole of the circumstances to determine whether, in its mind, the Respondent’sSeparators, and their design, remained confidential. [59] The Respondent describes Spicer as the employee in charge of designing and fabricating the Respondent’s Separators.Changers points out that Spicer is not an engineer or licensed mechanic and, during cross-examination, Spicer described himself as a“hands-on-guy.” Spicer also acknowledged that no drawings were prepared to design the Respondent’s Separators, and that the “researchand development” he conducted was “trial and error.” This Court could give innumerable examples of inventions that were developedthrough trial and error by non-professionals.

Professional or journeyman qualifications are not required for a person to developconfidential or proprietary information or products. [60] With respect to whether the design and construction of the Respondent’s Separators were a trade secret, in R.I.

Crane Limitedv Ashton, (ON SC), [1949] 2 DLR 481 at 485-86 (Ont HC); affirmed, (ON CA), [1950] 1 DLR 601(CA), the Ontario High Court applied the following definition: [A trade secret is] a plan or process, tool, mechanism or compound known only to its owner and those of his employees to whom it isnecessary to confide it… The term “trade secret”, as usually understood, means a secret formula or process not patented, but known onlyto certain individuals using it in compounding some

article of trade having a commercial value, and does not denote the mere privacywith which an ordinary commercial business is carried on.

See also on the definition of a “trade secret”, Roger T Hughes and Dino P Clarizio contributors, Halsbury’s Laws of Canada - Patents,Trade Secrets and Industrial Designs, II.1.(1), HPT-180 [61] Changers argues that any claim that the design of the Respondent’s Separators is a trade secret will fail, as the Respondent didnot protect the design of the Respondent’s Separators, which was available for viewing and inspection and has been in the public domainfor almost 40 years. [62] The fact that the Respondent’s Separators were transported, used in the field and exposed to public view might not derogatefrom their confidential nature.

Information does not have to be kept completely secret. The Alberta Court of Appeal considered this inTree Savers International Ltd v Savoy, (AB CA), 1992 CarswellAlta 220, 84 Alta LR (2d) 384 at 388-89, where it

said: It was argued on appeal that no technical trade secrets were involved because the respondent plaintiff did not keep the various pressuredevices in question secret enough. Some were used in the oilfields, and after use would be left lying on the ground for a few hours, evenovernight. Prospective customers were shown a diagram of one device. And so forth. It may be that telling all the details to the wholeindustry would be good evidence that there was no secret, or no longer any secret. But inadequate attempts to maintain a secret are notthe same thing.

Many households contain bottles of Benedictine, but it does not follow that its recipe is not secret. Furthermore, no one referred us to any evidence suggesting that the people in the field could have built their own pressure devices,merely by looking at the outside of one lying on the ground, or from the diagrams supplied by sales people. [63] Changers argue that the Respondents do not hold a patent for the Respondent’s Separators. The absence of a patent does notmake them any less confidential.

Information need not be novel, in a “patent sense” to attract protection under the law of confidentiality:Allison Coleman, The Legal Protection of Trade Secrets (London: Sweet & Maxwell, 1992), at p. 7 [64] The Respondent concedes that its employees, or those working on the Respondent’s Separators, did not sign confidentialityagreements. However, that does not usurp their common law duty to keep confidential information confidential.

In Anderson, Smyth &Kelly Customs Brokers Ltd v World Wide Custom Broker Ltd, 1996 ABCA 169 , 1996 CarswellAlta 395 at para 19 (CA), theAlberta Court of Appeal said: An employee has a basic common law obligation to render faithful and loyal service to his employer during his employment. As ageneral rule, an employee may leave his employment and lawfully compete against his former employer, taking with him knowledgegained in his former employment, but he may not take or use against his employer any of his employer’s trade secrets, confidentialinformation or customer lists, whether during or after his employment.

See also Flag Works Inc v Sign Craft Digital

(1978) Inc, 2007 ABQB 434 , 2007 CarswellAlta 1829 at para 90 (QB); RecoveryProduction Equipment Ltd v McKinney Machine Co (1995), (AB KB), 220 AR 1 at para 16 (QB). [65] In most of the cases to which this Court referred, a trial of the issue concerning, among other things, the confidential nature ofthe impugned product or process had been completed. Here, this Court is examining this issue at the very early stages of this litigation,without the benefit of viva voce evidence.

It is relying on affidavit evidence, transcripts of cross-examination on those affidavits, thewritten briefs of the parties and oral argument. In other words, at best, it is a cursory test of the evidence that will ultimately be placedbefore the trial judge. [66] In the end, this Court must look back to the guidance that the Supreme Court of Canada provided in RJR at paras 54-55,where it said: What then are the indicators of “a serious question to be tried”? There are no specific requirements which must be met in order to satisfythis test. The threshold is a low one.

The judge on the application must make a preliminary assessment of the merits of the case. ... Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and thirdtests, even if of the opinion that the plaintiff is unlikely to succeed at trial. A prolonged examination of the merits is generally neithernecessary nor desirable. [67] Based on this Court’s preliminary assessment of the merits, it concludes that there are serious issues that require a trial ofthose issues.

Those issues might include whether the Respondent has met the tests outlined in International Corona, including whetherRespondent’s Separators are special or unique, whether Changers used the Respondent’s confidential and proprietary information inhaving Hunterwood construct the Applicant’s Separators, and whether the Respondent’s Separators are a “trade secret.” This Courtmakes no comment on whether the Respondents will succeed at trial. Accordingly, on this portion of the tripartite test, the Respondenthas met its onus.

[68] If this Court is incorrect in its analysis on the nature of the injunction that the Respondent has sought and it is determined thatthe nature of the injunction is mandatory, this Court will very briefly address whether the Respondent has established a strong primafacie case.

In Setanta Sports NA Ltd v Score Television Network Ltd., 2009 CarswellOnt 4584 at para 46 (Sup Ct J), Spies J said: In his authoritative text Injunctions and Specific Performance, Justice Robert Sharpe states that the question of whether the plaintiff hasshown a strong prima facie case “probably means no more than, if the court had to finally decide the matter on its merits, on the basis ofthe material before it, would the plaintiff succeed?” I agree with the observation of Perell J. in the Quizno’s case, however, that this doesnot mean that the plaintiffs must actually prove their case. [Citations excluded]. [69] Of importance in this case is that Hunterwood attended the Respondent’s premises, without the Respondent’s permission, totake measurements and high-resolution photographs of the Respondent’s Separators.

As well, Chapman had in his possession drawingsof the Respondent’s Separators, which contained measurements and dimensions of the Respondent’s Separators. These steps were nottaken in the public view. They were taken “surreptitiously.” Had Chapman not felt that there was some impropriety in his so acting, hemight have sought his employer’s permission to undertake these steps.

He did not. [70] Until Hunterwood constructed the Applicant’s Separators, the Respondent’s Separators were the only ones in Alberta thatused rotary valves. [71] Remembering that this Court does not have all of the information that will eventually unfold during the trial, including vivavoce and detailed experts’ reports that are tested through cross-examination, based on the material before this Court, it finds that theRespondent has put forth a strong prima facie case that Changers used the Respondent’s confidential and proprietary information tocreate the Applicant’s Separators.. 3.

Will the Respondent suffer irreparable harm if the injunction is varied? [72] The second stage of the tripartite test that courts must apply when considering an application for interlocutory injunction iswhether the Respondent would suffer irreparable harm if this Court were to refuse the application: RJR at para 48.

The Supreme Courtof Canada in RJR at paras 63-64 said: At this stage the only issue to be decided is whether a refusal to grant relief could so adversely affect the applicants’ own interests thatthe harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application. “Irreparable” refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetaryterms or which cannot be cured, usually because one party cannot collect damages from the other.

Examples of the former includeinstances where one party will be put out of business by the court’s decision (R.L. Crain Inc. v. Hendry (1988), (SKKB), 48 D.L.R. (4th) 228 (Sask. Q.B.) ); where one party will suffer permanent market loss or irrevocable damage to its businessreputation (American Cyanamid, supra ); or where a permanent loss of natural resources will be the result when a challenged activity isnot enjoined (MacMillan Bloedel Ltd. v. Mullin, (BC CA), [1985] 3 W.W.R. 577 (B.C.C.A.) ).

The fact that one partymay be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able tocollect damages, although it may be a relevant consideration (Hubbard v.

Pitt, [1976] Q.B. 142 (C.A.)). [73] The standard of proof for this test is high, such that “there must be a high degree of probability that harm will in fact occur”:Sulphur Experts Inc v O’Connell, 2000 ABQB 875 , 2000 CarswellAlta 1347 at para 48(QB), citing Lubicon Lake IndianBand v Norcen Energy Resources Ltd, 1985 ABCA 12 , 1985 CarswellAlta 15, 36 Alta LR (2d) 137 at 143 (CA) [LubiconLake].

However, an applicant in an injunction is not required to show clear proof of irreparable harm; only doubt as to whether theadequacy of damages is sufficient: British Columbia (Attorney General) v Wale (1986), (BC CA), 9 BCLR (2d) 333(BCCA) at para. 51, aff’d (1991), (SCC), 53 BCLR (2d) 189 (SCC). [74] Often, one thinks that if harm is compensable in money damages, the harm is not irreparable. The Alberta Court of Appeal

rejected this notion in Lubicon Lake at paras 30-31, when it said: We accept the proposition in High on the Law of Injunction, 4th ed., vol. 1, p. 36 that: By irreparable injury it is not meant that the injury is beyond the possibility of repair by money compensation but it must be of such anature that no fair and reasonable redress may be had in the court of law and that to refuse the injunction would be a denial of justice. For the purposes of interim relief, and for the purposes of the test expressed by this court in Law Soc. of Alta. v. Black, 1983 ABCA 261, 29 Alta.

L.R. (2d) 326, [1984] 6 W.W.R. 755, 7 Admin. L.R. 55, 8 D.L.R. (4th) 346, this is what we mean by irreparable harm:it is harm for which no fair and reasonable redress would be available after trial. Thus, this Court must look beyond whether the harm is compensable in money damages, although money damages is a factor that mightweigh into its decision. [75] Like the “serious issue to be tried” aspect of the RJR tripartite test, a court granting an interim injunction can only do apreliminary assessment as to whether the applicant will suffer irreparable harm.

As Hunt J, as she then was, said in Amoco CanadaPetroleum Co v Alberta & Southern Gas Co, (AB KB), 1992 CarswellAlta 89 at para 48, 3 Alta LR (3d) 247 (QB): That “doubt” about the adequacy of damages is the proper way to apply the second test seems to me to be logical given the very natureof an interim order. As discussed earlier in regard to the threshold test, it is not the function of a judge at this stage to decide the issues.That, indeed, would be impossible given the limited material that is available. Similarly, in considering irreparable harm, there will ofnecessity be many unknowns at this stage.

To expect an applicant to prove irreparable harm could detract from one of the basic purposesof an interim injunction, namely, to preserve the status quo. As stated by Lord Diplock, the relevant question is doubt as to the adequacyof damages. [Emphasis in original]. [76] A loss of customers could ground an interim injunction.

In Polesystems Inc v Martec Manufacturing Ltd (1989), (AB KB), 67 Alta LR (2d) 159 at para 28 (QB), Virtue J said: In the case before me, the evidence discloses that if the defendants are allowed to use the plaintiffs’ designs and marketing information,the plaintiffs’ relationship with its customers will be impaired and the core of the plaintiffs’ business irretrievably harmed. To my mind,this is harm for which no fair and reasonable redress would be available after trial. Customers, once lost, may never come back. Financialstability, once lost, may never be recovered.

There is no evidence that Services has lost or is losing customers. [77] The Respondent argues that it will suffer irreparable harm through Changers’ continued use of the Applicant’s Separators andthat use “would seriously damage and cause significant harm to ... Services’ commercial interests and its competitive position.” TheRespondent then provides an example where Changers successfully secured a job which had originally been scheduled to be performedby Services. As well, at the time the Applicant’s Separators were seized, Changers was using them at another project.

As a result, theRespondent argues that Changers was using the Applicant’s Separators “to bid on work that would otherwise have gone to ... Services.” [78] Changers argues strongly that by their own admission Osborne and Spicer had no knowledge or information how theRespondent’s competitors remove catalyst from sour gas plants in Alberta, or what equipment they use. They cannot, therefore, attest towhether the Respondent’s Separators remove catalyst more cost-effectively or better than the processes and equipment used by theRespondent’s competitors.

As a result, Changers argues, there is no good evidence before this Court that Changers gained an unfaircompetitive advantage by copying any part of the Respondent’s Separators. This begs the question of why Changers used the materialthat Hatch and Chapman obtained to have Hunterwood create the Applicant’s Separators? [79] What the Respondent’s competitors are using to remove catalyst is but one aspect of the claim that it is making. Of equal

importance is whether the Respondent is losing its potential market share. This could be tied to what the Respondent’s competitors areusing to remove catalyst, but it could also be tied to the portion of the market that Changers is invading as a result of its using theApplicant’s Separators. In Scantron Corp v Bruce,1996 CarswellOnt 2087 at para 30 (Gen Div) [Scantron], Eberhard J said: It follows from the foregoing that I find the potential loss of market share to be irreparable harm. Potential loss of market share has beenrecognized as grounds for interlocutory relief.

Alberta Distillers Ltd. v Highwood Distillers Ltd. (1993), 49 C.P.R. (3d) 342 (Fed. T.D.)[Emphasis added]. See also KJA Consultants Inc v Soberman, (ON SC), 2002 CarswellOnt 467 at para 9, 17 CCEL (3d) 261 (SCJ)[KJA Consultants]. It is certainly conceivable that the Respondent will lose its market share. One can only surmise at this stage howChangers is approaching its new business.

However, the issue before this Court is whether the Applicant’s Separators assist it inincreasing its market share. [80] In Avva Light Corp v Komonoski, (1997), (AB KB), 204 AR 344 at para. 41 (QB), LoVecchio J said: When you are dealing with future economic considerations it is obvious that it is hard to demonstrate anything which is irreversible orhard to repair will occur. An element of irreparable harm to the Plaintiffs is the strategic advantage in the market place the Defendant’shave in competing with the Plaintiff’s through their knowledge of the Plaintiff’s business.

This knowledge a third party competing withthe Plaintiff’s would not have. It specifically includes the customer list and the particular production techniques and procedures utilizedby the Corporation. [81] Changers argues that any damage that Services suffers is compensable in monetary damages. The same can be said for anydamages that Changers suffers. We must remember that Services provided an undertaking as to damages when it obtained the Orders. [82] As mentioned earlier, although monetary damages are a factor that this Court must consider, it is not the only factor.

Thenotion of irreparable harm also includes “soft” damages, such as the loss of strategic advantage, relationship with customers, and thepotential loss of market share. The reason why courts consider these “soft” damages is that they are of such a nature that no fair andreasonable redress may be had. At this stage of these proceedings, the Respondent need not prove that it will suffer irreparable harm.

Itonly need prove doubt as to the adequacy of damages through showing the court that it will suffer these “soft” damages. [83] At this stage, this Court cannot determine the quantum of the market share that the Respondents might have lost or will lose.Nor can it determine whether the Respondent’s relationship with its customers will be damaged. What is clear, however, is that the only4 separators that are currently on the market are the Applicant’s Separators and the Respondent’s Separators.

If this Court were to orderthe return of the Applicant’s Separators to Changers, the parties would be directly competing with each other, which means that ifChangers “wins” a contract because of its use of the Applicant’s Separators, that would encroach on the Respondent’s market share. [84] Based on the foregoing, this Court is satisfied that the Respondents have satisfied their onus showing that they will sufferirreparable harm if this Court were to order the return of the Applicant’s Separators to Changers. Monetary damages will not compensatethe Respondents for this harm. 4.

Which party will suffer greater harm from maintaining or varying the injunction (i.e. the balance of convenience test)? [85] The third stage of the RJR tripartite test is for courts to assess which of the parties would suffer greater harm from thegranting or refusal of the remedy pending a decision on the merits: RJR at para 48. Part of the information that will inform the court willbe the factors the court considered when examining the first two stages of the tripartite test.

For example, had this Court found that thereis no serious issue to be tried, the party against whom the injunction is granted will undoubtedly suffer the greater harm. Similarly, ifdamages will compensate the party seeking the injunction, then it will suffer no harm. [86] In this case, as in many cases that deal with interlocutory injunctions, there is a paucity of information that the parties canpresent to the court which shows the harm that would accrue to them if this Court were to uphold or set aside the Orders.

Accordingly,the cause of action will assist this Court in its attempt to weigh the relative equities and balance the convenience.

[ 87 ] As mentioned earlier in these reasons, the Respondent alleges that certain information and documents were wrongfully taken from it when Chapman and Hatch left their employment with Services and joined Changers. They used this information to have Hunterwood construct the Applicant’s Separators.

Changers argues that this Court should not impose a substantial hardship on Changers based on the Respondent’s “questionable right.” This Court has found that the right the Respondent seeks to protect is not “questionable.” In KJA Consultants at para 13 , Molloy J said: With respect to his ability to compete, it has been somewhat restricted in terms of which companies he can undertake work for, but only because he has already breached his duty to the plaintiff in a manner that cannot be compensated for in damages.

To the extent that this interferes with his ability to compete in the marketplace, he is the author of his own misfortune. The plaintiff, on the other hand, has done nothing wrong and seeks only to be protected from Mr. Soberman ’s wrongful acts which are likely to result in irreparable harm to the plaintiff. No other remedy will protect the plaintiff and the plaintiff has given an undertaking as to damages. I conclude that the harm to the plaintiff if the injunction is not granted outweighs any harm to the defendant if the injunction is granted. [Emphasis added].

See also Indal v Halko , 1976 CarswellOnt 273 at para 24 (Sup Ct) . [ 88 ] Changers argues that it is in the start-up stages of the development of its business and that the Respondents have many other separators that it uses in the catalyst removal business.

Furthermore, it argues that the effect of the Injunction Order is to help protect the Respondent from competition in the catalyst removal industry, which gives the Respondent an advantage it would not be able to obtain through law or contract in the absence of the Injunction Order: Sulphur Experts Inc v O ’Connell , 2000 CarswellAlta 1347 at para 52 , 2000 ABQB 875 , 279 A.R. 246. In other words, this Court would be allowing Goliath to defeat David. Eberhard J, in Scantron was faced with the same argument.

She said at para 31 [citation excluded]: While magnitude of harm is not the deciding factor for a decision on irreparable harm, it does impact the consideration of balance of convenience. A large and apparently thriving company with a significant portion of market share can likely withstand the effect of an injunction not being granted more than a fledgling company can withstand the injunction or the legal costs of avoiding one in its first year of existence.

I understand the real difficulty in beginning an enterprise in the face of both the stiff competition of an established business and the resources of the established entity to litigate the new one out of the marketplace. I do not accept, however, that the bigger entity must simply stand by while it perceives its contractual rights are breached or a former employee breaches his duty not to act unfairly. [ 89 ] In the end, based on the information that the parties have provided to it, this Court finds that the balance of convenience favours the Respondent.

Although the Injunction Order causes harm to Changers, the Respondent will suffer the greater harm if this Court were to order that the Applicant’s Separators be returned to Changers. V. Conclusion [ 90 ] In the light of the foregoing, this Court orders that the ISS maintain possession of the Applicant’s Separators pending the trial of this matter. [ 91 ] The result of the trial of the issue concerning the propriety of the Applicant’s Separators and their use will determine whether Changers’ continued use was proper. Accordingly, the costs of the ex parte application and this application will be in the cause.

Heard on the 24 th day of January, 2013. Dated at the City of Calgary, Alberta this 4 th day of February, 2013.

K.D. Yamauchi JCQBA Appearances: John Batzel and Grant Stapon (Bennett Jones LLP) for Applicant / Defendants Dalton McGrath Q.C. and Michael O’Brien (Blake, Cassels & Graydon LLP) for the Respondents / Plaintiffs Richard Billington Q.C. and Judd M. Blitt (Billington Barristers) for the Independent Supervising Solicitor